Ghana receives bonus for reaching decision point

Ghana has received two bonuses in grant from the International Monetary Fund (IMF) and the European Union (EU) for reaching a decision point on the Highly Indebted Poor Countries Initiative (HIPC) in the shortest possible time.

The IMF granted the first bonus of 35 million dollars in February when the Institution met the Ghanaian Ministerial team after the country reached the decision point. The EU was Ghana's first development partner to release funds immediately as a HIPC bonus.

Yaw Osafo Maafo, Minister of Finance, signed a 37.8 million Euro (246 billion cedis) agreement in Accra on Thursday with the EU, which includes the second bonus of 4.9 million Euro (31.8 billion cedis).

The amount from the EU would be used to support on-going macro-economic and structural reform programmes under the Union's Poverty Reduction and Budgetary Support programme.

Explaining the mode of disbursement, Mr Osafo Maafo said the EU earlier in 2001 signed a financing agreement through which the Union made available 38.4 million Euro (249.6 billion cedis) to be disbursed in two phases.

The first phase of 17.25 million Euro (112 billion cedis) of the facility had already been released to support the 2002 budget while preparations were being made for the release of the second phase for an equivalent amount of money.

He said the rest includes 3.31 million Euro (22 billion cedis) for regional co-operation premium and the 4.9 million Euro bonus to be released immediately after the signing of the agreement.

Mr Osafo Maafo noted that poverty reduction is pivotal in Ghana's development process. "For this reason, Ghana is in the process of finalising its Poverty

Reduction Strategy in order to access the debt relief under the HIPC initiative." The HIPC Initiative is a debt relief programme by the World Bank and the IMF for developing countries, which cannot meet their debt obligations.

Under the Initiative, part of debts owed by the countries which prescribed to HIPC are written off but the said amounts were expected to be used to reduce poverty through health, education, and construction of feeder roads among other programmes.

Mr Osafo Maafo said the foreign exchange equivalent of Thursday's agreement would be released to the Bank of Ghana to be disbursed through the inter-bank foreign exchange system to finance eligible imports of the EU/ACP origin.

The cedi equivalent proceeds accrued from the disbursement would be transferred into the consolidated fund to support the implementation of poverty reduction programmes in the 2002/3 budgets.

The Minister was of the opinion that by disbursing the amount through this process, enterprises would have access to foreign exchange for the importation of eligible goods and would also contribute a great deal to achieving government's policy to create wealth through the private sector. The process would also help improve the balance of payment position.